Chord is a peer-to-peer lookup service that maps keys to nodes in a distributed system. It addresses problems like load balancing, decentralization, scalability, and availability that arise from nodes frequently joining and leaving the network. Chord uses consistent hashing to assign keys to nodes, and each node maintains a finger table with pointers to other nodes to efficiently route lookup requests. When nodes join or leave, only a few keys are redistributed and finger tables are updated through a stabilization protocol to maintain correctness.